The purchase of 20 million Papua Petroleum shares also gives Lion the option to acquire either a 10% or 50% interest in its 100%-owned licences, PPLs 285,286,287 and 288, that cover 38,000 square kilometres in Papua New Guinea's southwest.

Eight wells have been drilled in the licences, which Lion said are located in the foreland area where exploration costs are considerably less than in the rugged fault belt region.

According to Lion, 30 prospects and leads have been identified within the tenements.

Papua Petroleum has a total of 106.61 million shares available, with no options or convertible securities on issue.

The settlement of the share purchase should be made today.